The net income of Union Carbide increased in in a single year by over $200 million, due almost entirely to three changes in accounting principle: (a) the depreciation method was changed, resulting in lower expense, (b) interest costs during construction were capitalized rather than expensed, and (c) the method for recognizing investment tax credits (not available under current tax law) was changed to a method that reduced expenses.

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In the given case the expenses have been considerably reduced and ther... View the full answer